The Dallas hotel market comprises nine submarkets located throughout the greater Dallas area. While the greater Fort Worth area, inclusive of such suburban cities as Grapevine and Arlington, is not addressed here, it is important to note the Fort Worth market is also experiencing significant growth. The greater Dallas area has strengthened and expanded in recent years and benefits from a vast transportation network that includes a web of highways, commuter-rail service, a light-rail line, and two major airports. Occupancy registered above the 60% mark from 2005 through 2007; during that same period, average rate increased above the rate of inflation year-over-year. The effects of the Great Recession caused occupancy to notably decline in 2009; however, the Dallas market has proven resilient in the face of economic challenges because of its diverse economic base. The overall strength of the local economy allowed occupancy to rebound in 2010. Occupancy continued to improve through 2015 and reached a new peak above the 70% mark that year. Year-end 2016 data show occupancy rising above 71%. As shown, demand growth exceeded the change in new supply from 2010 to 2016. Average rates rose annually from 2011 through 2016, concurrent with the strengthening economy and high demand levels.
A building boom has taken hold in the northern suburbs, and new construction of corporate campuses (including Toyota Motor Corporation’s new U.S. headquarters), office towers, and mixed-use developments dot the northern suburbs. Frisco's "$5-Billion Mile" is the focus of four major developments. Despite the "$5-Billion Mile" moniker, the area will contain roughly $6.5 billion of investment within one mile upon completion. New construction and revitalization efforts are also evident in the northern portion of Dallas; namely, the $3-billion Dallas Midtown mixed-use development near Interstate 635 and the Dallas North Tollway is expected to transform the Valley View Mall site. Closer to the nucleus, the Central Business District (CBD), Uptown, Victory, and West Dallas areas have benefitted from revitalization efforts, with growth occurring in the high-density residential, office, hotel, and retail/restaurant sectors. Attractions, such as Klyde Warren Park, the Perot Museum of Nature and Science, and the Dallas Farmers Market, have helped rejuvenate urban living and pedestrian traffic in Dallas. The sports and entertainment events held at the American Airlines Center and the historic attractions within the city of Dallas draw significant leisure demand. The addition of Dallas's new headquarters hotel in November 2011 improved the salability of the Kay Bailey Hutchison Convention Center, booking more citywide conventions and other large exhibits and events. Healthcare development has also surged, with significant expansions at both Parkland Memorial Hospital and the UT Southwestern Medical Center. Moreover, in addition to Dallas/Fort Worth International Airport’s status as one of the nation's largest airports, the end of federal flight restrictions at Dallas Love Field in October 2014 has significantly boosted operations out of the airport. These factors have played a key role in steady occupancy growth within the core submarkets. Overall, both the suburban and urban submarkets within Dallas are anticipated to benefit from long-term improvements in RevPAR.
Transaction activity remained relatively stable in 2016. The top single-asset sale in 2016 was the 220-room Hotel Crescent Court, which traded at approximately $350,000 per room. The two largest single-asset transactions in 2015 were the Le Méridien Dallas The Stoneleigh at $70 million, or roughly $398,000 per room, and the Le Méridien Dallas by the Galleria at $52 million, or approximately $202,000 per room. Given the revitalization efforts and new construction projects evident throughout the Dallas metro area, including the expansion of medical facilities and new residential and commercial projects, as well as the market's ability to absorb new supply quickly, the outlook remains positive.